Marco Mezger, Executive Vice President and COO, Neumonda and President of Memphis Electronic
The memory super cycle is no longer a forecast - it is a reality. Across all major financial institutions and industry media, we see the same message. 2026 will be defined by structural undersupply, especially in DRAM and NAND.
Here’s what we are seeing.
HBM growth pulls a significant portion of high-quality DRAM wafer output and packaging capacity into a premium segment with very high revenue per bit. This makes it less attractive for suppliers to flood the standard DRAM market because they can allocate marginal bits to HBM and maintain strong margins.
And as supply shrinks faster than demand, DDR4 behaves as DDR3 did in its late phase: volumes decline, but prices increase and remain sticky. Practically, by 2027, DDR4 supply will be heavily concentrated at Nanya and Winbond, and pricing will reflect scarcity more than cost. Companies that need DDR4 beyond 2027 should treat it like a specialty component and secure multi-year contracts rather than expecting market pricing to normalize.
Analysts forecast a global MLC NAND Flash capacity drop of over 40% in 2026. The decline stems from Samsung’s March 2025 announcement to end MLC NAND production, with final shipments in June 2026.
Kioxia, SK hynix, and Micron have also scaled back, focusing on other technologies and meeting only existing demand. While end-market demand—industrial control, automotive electronics, medical devices, and networking—remains steady, growth prospects are limited. Thus, the major players have little motivation to increase capacity.
Manufacturers like Marconix aim to ramp up production, but this will take time. YMTC is also increasing output, but mainly for China, yet global impact hinges on export controls, and reliance on YMTC introduces geopolitical risks.
Semiconductor fabs require steep investments and long-term commitment. Scaling effects, as we have known them, diminish as we move to the advanced processing nodes we are seeing today. High interest rates and elevated energy costs further increase capex hurdles and operating expenses, especially for EUV-heavy DRAM and high-layer NAND fabs, which are extremely power-intensive.
The net effect is that memory suppliers become more cautious in adding capacity, reinforcing the current environment of disciplined supply. This limits how far average sales prices can fall in future downturns. For buyers, the implication is that “old world” ultra-cheap memory pricing is very unlikely to return.
Unit growth from consumer end markets such as PCs and smartphones is expected to remain in the flat-to-low single-digit range, with incremental value increasingly driven by premium, AI-enabled devices rather than broad-based volume expansion. As a result, these segments are likely to contribute stable but limited growth to overall semiconductor demand.
At the same time, the principal sources of incremental demand and pricing leverage have shifted toward data centers, artificial intelligence, automotive, and industrial applications. Hence, investment, capacity allocation, and technology roadmaps are now being primarily shaped by higher-growth, higher-value compute- and data-centric markets.
This structural rebalancing is a key feature of the current semiconductor super-cycle and underpins the sustained tightness and prioritization dynamics expected through 2026 and beyond.
Ever since the painful 2022 and 2023 downturn, memory manufacturers have controlled their capacity very tightly. Samsung, SK, Hynix and Micron reduced their investment in wafer capacity, and this investment gap created the current tightness.
Although all major players have restarted large projects to build or update their fabs, these expansions take years and come too late to ease current shortages.
The targeted nature of the new investments means the gap will not close quickly. This keeps the market structurally undersupplied, moving to 2026 and perhaps 2027.
In times of allocation, the buyer’s market shifts to a seller’s market, requiring a strategy shift.
The current semiconductor super-cycle reflects the convergence of two powerful forces: structurally elevated demand driven by AI, automotive, and industrial digitalization, and a supply base that is being deliberately constrained by capital discipline, node transitions, and geopolitical risk management. This combination is producing a more prolonged and less volatile upcycle than in previous boom–bust periods.
While incremental capacity additions and technology conversions may introduce pockets of easing—particularly in NAND and selected standard DRAM segments—from the second half of 2027 onward, the intervening period is characterized by a high probability of allocation pressure and supply prioritization across most memory categories.
From a strategic standpoint, the critical issue for system manufacturers in 2026 and 2027 is not price optimization but security of supply. Access, continuity, and predictability of delivery will increasingly determine production stability and revenue protection, even in scenarios where pricing later moderates.
Accordingly, procurement and planning frameworks over the next 24–30 months should be built around resilience, visibility, and risk management rather than short-term cost minimization.
Partnering with MEMPHIS Electronic will give you access to the expertise and guidance to help you make the best decisions throughout 2026.